A plan to slash more than $500 billion from future Medicare spending -- one of the biggest sources of funding for President Obama's proposed overhaul of the nation's health-care system -- would sharply reduce benefits for some senior citizens and could jeopardize access to care for millions of others, according to a government evaluation released Saturday.

The report, requested by House Republicans, found that Medicare cuts contained in the health package approved by the House on Nov. 7 are likely to prove so costly to hospitals and nursing homes that they could stop taking Medicare altogether.

Congress could intervene to avoid such an outcome, but "so doing would likely result in significantly smaller actual savings" than is currently projected, according to the analysis by the chief actuary for the agency that administers Medicare and Medicaid.

Under the proposed law, Medicare compensation rates will be so low that caregivers will refuse to accept them. So what else is new ? Under current law Medicare compensation rates will be so low that caregivers will refuse to accept them. Current law and the proposed new law are both frauds in exactly the same way similar ways. Since 1997 there has been a restriction on Medicare spending such that drastic cuts are a year away, always one year away.

[some lines deleted. My guess about what the report said was wrong].

update: I have now read the report (warning pdf) ... well actually up to the passage stressed by Republicans and Montgomery. Montgomery's article focuses on one paragraph deep in the report which begins "It is important to note that the estimated savings for one category of Medicare proposals may be unrealistic." That's some serious digging.

The paragraph goes on to discuss what seems to be new additional budgetary flim flam which is assuming that productivity in hospitals and nursing homes grows at the national average (measured productivity grows much more slowly and it doesn't matter if this is due to unmeasured improved quality of care). That would be part of a large savings of $ 282 billion. The report doesn't describe what the savings would be if Medicare rates were adjusted to a reasonable forecast of productivity growth.

Now I had assumed that Medicare cuts other than eliminating the Medicare advantage boondoggle were reductions in money effectively given to hospitals (and nursing homes etc) so they could afford to take care of the uninsured. Hospitals' budgets will be affected by increased health insurance coverage both the total fraction of people insured and the fraction of people with pre-existing conditions insured. This means that the total effect on Hospitals' budgets can't be calculated assuming only Medicare payment rates change.

Importantly, the Foster (the author) assumes that reduced Medicare payments will cause hospitals to choose to refuse Medicare patients and not drive Hospitals bankrupt. It is true that relatively lower Medicare rates will cause more hospitals to refuse Medicare patients. How many currently do ? I googled "hospitals which refuse medicare" I got links to articles about physicians who refuse Medicare patients and this link to someone who works at a hospital where they talked about refusing Medicare patients.

Medicare rates are already low. There sure don't seem to be many hospitals which refuse to treat Medicare patients.

Quite frankly this doesn't seem to be a huge problem. The idea that it will get even bigger if Medicare rates fall further below other rates doesn't seem to me to merit page 1 treatment.

My current interpretation is that Foster is saying that he believes that the new restrictions on Medicare compensation will be waived just as the existing restrictions are waived. He can't say that Congress is flimflamming so he has to explain how this might be a natural response to unforseen events in the future.

My current guess is that the event will be the perfectly forseable complaints from hospitals and nursing homes and that the forecast that Congress will waive the rule is the only forecast a responsible actuary can make.

The Republican/Montgomery/www.washingtonpost.com headline guy spin that elderly people will be denied care if the bill passes is absurd. If that's the way things worked, the 1997 rule wouldn't be waived year after year.

The document to which I link asserts that Veterans care is queue rationed and that the veterans administration does provide as high quality care as that available to people with private insurance. Non ideological sources rate the veterans administration as the best care provider -- number one.

I think that "Hospitals will refuse Medicare and/or Medicaid" is a serious policy concern on a level similar to the "tax cuts cause increased revenues." And here it is on the front page of www.washingtonpost.com.